South Korea's central bank does not expect that the collapse of Silicon Valley Bank in the U.S. will pose a threat to the overall domestic financial sector.

Presiding over a market inspection meeting on Monday, Bank of Korea(BOK) Senior Deputy Governor Lee Seung-heon made the assessment, citing the improved soundness of U.S. banks and the U.S. government's move to protect all deposits.

The deputy governor warned, however, that there could be increased volatility in the global financial market due to its impact on investor sentiment and the release of the U.S. consumer price index on Tuesday.

Lee pledged to closely monitor local interest rates, the stock market and currency, and take appropriate market stabilization measures if necessary.

Finance minister Choo Kyung-ho also gave a similar assessment during an exports meeting with officials on Monday, saying many of those issuing predictions on the effect of the collapse have suggested a limited impact on the global economy and financial markets.

The minister then promised to reinforce state monitoring to mitigate the adverse impact on the local financial market and real economy.